Nautilus 2006 Annual Report Download - page 13

Table of Contents
Shimano . Our main competitors within the running footwear category are Mizuno , Brooks Sports and Asics . Within the running apparel
category, we believe the main competition to be the same as with running footwear, with the addition of Sugoi . Fitness Apparel competitors
include Adidas and Champion , as well as smaller female specific brands such as Parana, Mirika, LuLu Lemon, and Title Nine . We believe the
key competitive factors in these markets include quality, product variety, product innovation, in-season availability and price.
EMPLOYEES
As of February 28, 2007, we employed approximately 1,500 employees. Management considers its relationship with employees to be
good. None of our employees are subject to any collective bargaining agreements. There has never been a material interruption of operations
due to labor disruptions.
SIGNIFICANT CUSTOMERS
We had no individual customers that accounted for 10 percent or more of our consolidated net sales during fiscal 2006, 2005, and 2004.
INTELLECTUAL PROPERTY
Trademarks – We own many trademarks including Nautilus
®
, Bowflex
®
, Power Rod
®
, TreadClimber
®
, Schwinn
®
Fitness,
SelectTech
®
, StairMaster
®
, Trimline
®
, Pearl Izumi
®
, Microsensor
®
, Ultrasensor
®
, Syncroframe
®
, Universal
®
, and 3D Chamois
®
. Our
trademarks, the great majority of which are either registered or protected by common law rights, are used on nearly all of our products sold in
the U.S. and internationally. We believe that having distinctive trademarks readily identifiable by consumers is an important factor in creating a
market for our goods, in identifying our Company, and in distinguishing our goods from others.
Each federally registered trademark is renewable indefinitely if the trademark is still in use at the time of renewal. We are not aware of
any material claims of infringement or other challenges to our trademark rights.
Patents – The Company has a broad array of patents, both issued and pending, covering its exercise equipment. Within these patents are
various products and technologies including Treadclimber, variable stride ellipticals, selectorized weights, incumbent bicycles, and Spiraflex.
Our patent protection for some of these technologies extend as far as 2025. Expiration of our patents could trigger the introduction of similar
products by our competitors.
Building our intellectual property portfolio is an important factor in maintaining our competitive position in the fitness equipment and
apparel industries. We have followed a policy of filing applications for the U.S. and foreign patents on inventions, new designs and
improvements that we deem valuable to our business. If we do not, or are unable to, adequately protect our intellectual property, our sales and
profitability could be materially adversely affected. We protect our proprietary rights vigorously and take prompt action to prevent counterfeit
reproductions of or other infringing on our intellectual property. As we increase our market share, geographic scope and product categories, we
anticipate that intellectual property disputes will increase making it more expensive for us to establish and/or protect our proprietary rights, and
to defend against claims of infringement by others. Refer to Note 14 to the consolidated financial statements located at Part II, Item 8 of this
Form 10-K for a discussion of significant intellectual property disputes.
ENVIRONMENTAL MATTERS
Our operations are subject to federal, state and local health and safety and environmental laws and regulations, as well as those in other
countries, that impose workplace standards and limitations on the discharge of pollutants into the environment and establish standards for the
handling, generation, emission, release,
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